Income Tax Assessment Amendment Regulations 2001 (No. 2) 2001 No. 26
EXPLANATORY STATEMENT
STATUTORY RULES 2001 No. 26
Issued by authority of the Assistant Treasure
Income Tax Assessment Act 1997
Income Tax Assessment Amendment Regulations 2001 (No. 2)
The Governor-General may make regulations under section 909-1 of the Income Tax Assessment Act 1997 (the Act) for, the purposes of the Act.
The purpose of these regulations was to insert into Regulation 28-25.01 of the Income Tax Assessment Regulations 1997 (the Regulations), for the purposes of Division 28 of the Act, the 'cents per kilometre' rates for use in calculating a deduction for car expenses for the 20002001 income year.
These regulations will also be used to calculate the taxable value of a number of fringe benefits that relate to motor vehicles (such as remote area holiday travel) provided in the fringe benefits tax year ending 31 March 2001. This is achieved by the employer using the rates in the regulations for the purposes of determining the amount of reimbursement to the employee where, for example, the employee has used his or her own vehicle for the holiday travel.
Division 28 of the Act outlines the rules for working out deductions for car expenses if a taxpayer owns or leases a car or hires a car under a hire purchase agreement. The taxpayer may calculate a deduction for car expenses using one of four specified methods. Under the 'cents per kilometre' method in section 28-25 of the Act, the number of business kilometres the car travelled during the year of income, up to a maximum of 5,000 kms, is multiplied by the number of cents per kilometre for the car. The prescribed 'cents per kilometre' rate is determined in relation to the car's engine capacity as set out in Regulation 28-25.01.
If a taxpayer wishes to claim for more than 5,000 business kilometres, he or she must use one of the other methods outlined in Division 28 of the Act.
Since the 1986-1987 income year, the rates in the Regulations had followed the rates of motor vehicle allowance for the Commonwealth Public Service set out by the Department of Employment, Workplace Relations and Small Business. The rates are revised each year.
The new rates for the 2000-2001 income year are as follows:
Description | Engine capacity of car
not powered by a
rotary engine (cubic
centimetres) | Engine capacity of car
powered by a rotary
engine (cubic
centimetres) | Rate per
kilometre
(cents) |
Small car | Not exceeding 1600cc | Not exceeding 800cc | 48.9 |
Medium car | Exceeding 1600cc but
not exceeding 2600cc | Exceeding 800cc but not
exceeding 1300cc | 58.5 |
Large car | Exceeding 2600cc | Exceeding 1300cc | 59.5 |
| | | |
Details of the Regulations are as fellows.
Regulation 1: Names the Regulations.
Regulation 2: Provides that the Regulations commenced on gazettal.
Regulation 3: Provides that Schedule 1 amends the Regulations to insert the rates for the 20002001 year of income.
Schedule 1: This inserts item 4 into Regulation 28-25.01 of the Regulations for the purposes of Division 28 of the Act, the 'cents per kilometre' rate for the 2000-2001 income year.
Overview
The Income Tax Assessment Amendment Regulations 2001 (No. 2) were enacted to update the rates used for calculating car expense deductions and fringe benefits related to motor vehicles for the 2000-2001 income year under the Income Tax Assessment Act 1997. These regulations were introduced by the Assistant Treasurer and were made under the authority of section 909-1 of the Act. The primary objective was to align the 'cents per kilometre' rates with the updated rates for the specified income year, ensuring taxpayers and employers could accurately determine allowable deductions and taxable benefits. The rates, which had previously followed the Commonwealth Public Service motor vehicle allowance rates, were revised to reflect changes in engine capacity categories for small, medium, and large cars, including those powered by rotary engines.
Scope and Application
The Income Tax Assessment Amendment Regulations 2001 (No. 2) applies to taxpayers who own, lease, or hire a car for use in their income-producing activities, and who are seeking to claim deductions for car expenses under Division 28 of the Income Tax Assessment Act 1997. These regulations primarily affect individuals, businesses, and entities that use vehicles for business purposes and need to calculate their car expenses for tax purposes. The regulations cover the Commonwealth jurisdiction and apply to the 2000-2001 income year, as specified in Schedule 1. The regulations extend the application of the Income Tax Assessment Act 1997 by inserting the revised 'cents per kilometre' rates for calculating car expense deductions, which are used for determining the taxable value of certain fringe benefits related to motor vehicles. The rates are determined based on the car's engine capacity, and there are different rates for small, medium, and large cars. The amendments made by these regulations are limited to the insertion of specific rates for the mentioned income year, and they do not alter any other provisions of the Act or the Regulations.
Key Provisions
The Income Tax Assessment Amendment Regulations 2001 (No. 2) amends the Income Tax Assessment Regulations 1997 by inserting new 'cents per kilometre' rates for the calculation of car expense deductions for the 2000-2001 income year. These rates are inserted into Regulation 28-25.01 of the Income Tax Assessment Regulations 1997 (Regulations), which pertains to Division 28 of the Income Tax Assessment Act 1997 (Act). The rates are specified according to the engine capacity of the car and whether the car is powered by a rotary engine (Sections 28-25 and 28-25.01).
The Regulations impose specific obligations on taxpayers who use the 'cents per kilometre' method to claim deductions for car expenses. For the 2000-2001 income year, taxpayers must use the prescribed rates outlined in Schedule 1 of the Regulations. These rates vary based on the engine capacity of the car and whether it is powered by a rotary engine. For instance, a small car with an engine capacity not exceeding 1600cc (or 800cc if powered by a rotary engine) has a rate of 48.9 cents per kilometre, while a large car with an engine capacity exceeding 2600cc (or 1300cc if powered by a rotary engine) has a rate of 59.5 cents per kilometre (Regulation 28-25.01).
In addition to the car expense deductions, the Regulations also apply to the calculation of the taxable value of certain fringe benefits related to motor vehicles. Employers must use the rates provided in the Regulations to determine the amount of reimbursement to employees for the use of their own vehicles for approved purposes, such as remote area holiday travel, within the fringe benefits tax year ending 31 March 2001 (Division 28).
Failure to comply with the prescribed rates and methods for calculating car expense deductions or fringe benefits may result in penalties under the Act. The specific penalties are not detailed in the explanatory statement but generally, penalties for non-compliance with income tax regulations can include fines and interest on any unpaid tax. The severity of the penalties can depend on the nature and extent of the non-compliance, with potential for significant financial repercussions for both taxpayers and employers.